A+ R A-

News Wire

Blacks Less Prepared for the Next Financial Crisis

E-mail Print PDF

By Freddie Allen
NNPA Washington Correspondent

WASHINGTON (NNPA) – Minorities clinging to the middle class have come out of the Great Recession at a higher risk for falling into poverty during the next economic crisis, according to a recent report by the Center for American Progress, a nonpartisan think tank in Washington, D.C.

The report titled, “Making Sure Money Is Available When We Need It,” noted that over the past 30 years, household risk exposure increased for many Americans, following the crash of the saving and loan industry in 1989, the rise and fall of the tech bubble in 2000, and most recently the collapse of housing market in 2007 that led to the Great Recession.

Households have experienced more wealth volatility since the late 1980s because there has been more risk in the market and because they have been increasingly exposed to those risks, said the report.

The study found that was 27 percent of non-White households were at “very high risk” of exposure compared to 22.7 percent for Whites. The report also said that: “The risk exposure for nonwhite households, has grown faster than the risk exposure for white families.”

Household wealth — a family’s asset-to-debt ratio — was a determining factor on a families’ ability to weather the next economic disaster and limit their exposure to financial ruin.

According to the Economic Policy Institute’s report “The State of Working America, 12th Edition” stated that: “the median net worth of Black households was $4,900 in 2010, compared with $1,300 for Hispanic households and $97,000 for White households.” The EPI report also noted that a third of Black households (33.9 percent) had zero or negative wealth compared to 18.6 percent of White households.

When asked why minorities are at a greater risk, some economist say the conditions that led to record foreclosures and unemployment rates are often beyond their control.

“It’s like coming to New Orleans after [Hurricane Katrina] and saying, “Well, what could these people have done to avoid being stuck in the water? It’s blaming the victim,” said Bill Spriggs, chief economist at AFL-CIO, and economics professor at Howard University. “The idea that some individual by themselves could have prevented the levies from collapsing – really? That’s what we’re in the middle of — the foreclosure crises swept away some people who were at fault because they acted irresponsibly but many of whom had nothing to do with [riskier investments].”

For many American families, homeownership had been the key to gaining a strong foothold in the middle class and for many families in the Black community its still one of the safest assets to own. The deluge of subprime mortgages, not an inability to afford a home, changed that.

“African Americans were targeted more for subprime loans they didn’t do anything risky like start buying stocks instead of mutual funds but they wound up holding what were riskier investments by virtue of the way the housing market works, said Wilhelmina Leigh, a senior research associate at the Joint Center for Political and Economic Studies, a group that works to improve the socioeconomic status of African Americans and other people of color.

In the wake of housing market crash a number of banks, including Wells Fargo, Bank of America and Sun Trust, settled lawsuits that charged that they illegally targeted minority borrowers for subprime loans.

“Communities of color were prime the targets of subprime lenders that offered very high interest rate loans. The loans were not intended for sustainable home ownership a lot of these loans were actually designed to fail,” said James Carr, a housing finance and banking consultant and economic fellow for the Insight Center for Community Economic Development.

Bill Spriggs, chief economist at AFL-CIO, agreed.

“The big problem that African American’s faced in how we got caught up in the [housing market crash] is that we were redlined,” said Spriggs.

Redlining, a systemic practice of refusing services or charging excessive prices for financial or health care services based on a person’s zip code, is often racially-motivated.

And financial literacy isn’t always the answer.

“It’s very difficult for someone just on the basis of financial literacy, especially given what most people mean by that, because you can’t detect discrimination, to be suspect of loan conditions is a different antennae than financial literacy, said Spriggs. “Knowing when you’re being discriminated against, it’s a different antenna.”

To profit from market success while avoiding risks, often takes more than financial literacy, just ask the economists on Wall Street who were just as shocked as the average Joe or Jane when the housing market crashed.

“Most economists got it wrong which is why we are where we are,” said Spriggs. “If you were someone that was financially literate you were watching the news and reading the Wall Street Journal or listening to the chairman of the Federal Reserve.”

Even as Wall Street roars back, reaching record highs this year, the last economic crisis has left minorities more vulnerable to next one.

The 2013 “State of the Dream” report by United for a Fair Economy found that, “Black and Latino families came out of the Great Recession much more highly leveraged (holding more debt relative to their net assets) than White families. White families on average have a debt burden equal to just 17% of their net worth, while Black and Latino families owe 53% and 58%, respectively.”

The Center for American Progress report on household risk recommended a number of approaches to helping families protect themselves from the economic downturns.

“Policymakers can facilitate risk management through greater transparency of risk exposure, automating desired investment choices through default investment options, and helping develop key markets such as those for insurance and reinsurance products and those for professional advice,” stated the report.

“You can’t expect the average person to know how to avoid every scam or every get rich quick gimmick because people are very creative, said Leigh. “You can’t expect that the average Joe is going to know not to take out an adjustable rate mortgage.”

Leigh said that policymakers must also address predatory lending practices outside the housing market including car loans, payday loans and the refund anticipation loans that are popular during the tax season.

Lawmakers have to address each of the pieces, said Leigh.

Blacks also need to support the Consumer Financial Protection Agency, said Leigh. The Consumer Financial Protection Agency was designed by the Obama Administration to rein in companies that often exploit unsuspecting consumers for profit.

Carr said that the CFPA is for those communities who have access to the least amount of professional financial advice, “so, that you don’t have to have a Ph.D. in finance to successfully access a financial product without having to worry about it blowing up on you.”

Rand Paul Relies on the Past in Hopes of Winning Black Votes in the Future

E-mail Print PDF

By Maya Rhodan
NNPA Washington Correspondent

WASHINGTON (NNPA) – Rand Paul, the conservative Republican senator from Kentucky, tried last week to pave the way for Blacks to vote for Republicans in the future by extolling the GOP’s accomplishments of the past.

Speaking at Howard University, Paul said: ““The story of emancipation, of voting rights and, of citizenship, in the modern era from Frederick Douglass to the present is really, in fact, the history of the Republican Party.”

But he had to acknowledge that the overwhelming majority African-Americans don’t share that view.

“How did the party that elected the first Black U.S. senator, the party that elected the first 20 African American congressmen, how did that party become a party that loses 95 percent of the Black vote?” Paul asked. “How did the Republican Party, the party of the Great Emancipator, lose the trust and faith of an entire race?”

Paul’s speech was an appeal to Black voters and an effort to set-the-record-straight about his personal beliefs and the actions of his party as a whole.

Most Blacks cast their vote for Republicans until Franklin D. Roosevelt and his New Deal. Still, as late as 1960, Republicans were receiving about a third of the Black vote. But that changed when Republicans adopted a “Southern strategy,” basically writing off the Black vote in an effort to directly appeal to White segregationists.

In the process, the Republican and Democratic parties switched positions in the South. Democrats were more sympathetic to issues important to Blacks and Republicans appealed directly to Southern Democrats, many of whom had risen to power by suppressing Black voter participation.

Paul said that while Democrats offer African Americans “economic emancipation” and a tangible promise that “puts food on the table,” the Republican promises of opportunity and free market will “lead to growth.”

Paul said, “Big government is not a friend to African Americans. If you’re struggling to get ahead, you’ve got student loans and private debt, you should go with a political party that leaves more money in the private sector.”

The audience reacted as Paul struggled to recall the name of Edward Brooke, the first Black senator from Massachusetts. But Paul continued to press his case. He asked, “Would any of you know that the founders of the NAACP were all Republicans?”

The audience erupted in reactions ranging from laughter to groans

That same NAACP no longer considers Republicans partners in the struggle for equality.

On the NAACP Legislative Report Card covering the 112th Congress, for example, every Republican in the United States Senate and House of Representatives earned an “F.” By contrast, 159 Democrats in the house earned As and only four received Fs. In the Senate, no Democrat earned an F and 47 got As.

Paul did not win over many member of the audience with his support of voter ID laws.

When asked about his stance on voting rights in light of the 2012 voter suppression efforts put in place by mostly Republican-dominated state legislatures across the country, Paul said, “If you liken showing a driver’s license to a literacy test, you demean the whole of what happened in the 1940s and 50s,” he said. “Showing your driver’s license is not unreasonable to have an honest election, that’s the main thing Republicans are trying to get across.”

Voter Identification laws, however, would have been detrimental to the turnout of hundreds of thousands of young and minority voters—as many as 700,000 young voters, according to a joint study between the University of Chicago and Washington University in St. Louis. Twenty five percent of Blacks do not have government issued identification.

Even some moderate Republicans have complained about the party’s sharp shift to the right, becoming captive of Tea Party darlings such as Paul.

Former Florida Gov. Charlie Crist said the party has moved so far to the right that even Ronald Reagan would not be welcome in the Republican Party today.

Paul was asked about his stance on the Civil Rights Act of 1964. A member of the Howard University staff asked, “When is it OK legally to discriminate?”

Paul replied that he believed the question was a “mischaracterization” and that he has “never been against the Civil Rights Act, ever.” Instead, he claimed to have been against the “ramifications of certain provisions of the Act.”

However, in a 2010 interview with the Louisville Courier-Journal, Paul said that because he is a champion for freedom instead of making the actions of “boorish people” illegal, he would rather “civilized people” choose instead to “publicly criticize that, and don’t belong to those groups, or don’t associate with those people.”

He explained, “I think it’s a bad business decision to exclude anybody from your restaurant—but, at the same time, I do believe in private ownership,” Paul said in the 2012 interview. “But I absolutely think there should be no discrimination in anything that gets any public funding, and that’s most of what I think the Civil Rights Act was about in my mind.”

Gregory Carr, the chair of the African American Studies Department at Howard University, was unimpressed with Paul’s attempt to win over Black voters.

“I think what he did was cover himself with the veneer of history,” Carr said. “He wasn’t dealing with history at all; he completely evaded it and moved very quickly to the ground he’s most comfortable in.”

Carr added, “He not only evaded the Republican Party question, he outright lied about the Voting Rights Act and Civil Rights Act positions he has been on record as having had in the past. He would have been more honest to say I’ve said these things and I’ve rethought them, but to completely deny the fact that he said them really showed us his political character.”

Paul was the first Republican politician to speak on the campus since 2009 when then-Republican National Committee chairman Michael Steele spoke at a town hall.

“Republicans often aren’t understanding of kids who make bad choices,” Paul said. “I’m looking to change that. We should not take away anyone’s future over one mistake.”

He said he is working on laws to make sure non-violent offenders don’t get put away for lengthy sentences, and that first-time offenders receive counseling.

“Some argue with evidence that our drug laws are biased, they are the new Jim Crow,” Paul said. “But to simply be against them for that reason misses a larger point – they are unfair to everyone—Black, White, and Brown”

When asked which Republican Party he most identified with, the pre-19th century Republican Party or the post-1968 Republican Party, Paul responded that there is no difference between the two.

“People perceive those as being completely different parties,” Paul said. “You don’t object to the party of emancipation, voting rights, citizenship and all of that, but the argument I’m trying to make is that we haven’t changed.

“I don’t mean that to be insulting,” Paul said. “The Republican Party hasn’t talked enough about the great history and interaction between the Republican Party and Black history in our country.”

Stanford Frazier, a senior at Howard University, says although Paul achieved what he sought to do by speaking at Howard, he alone won’t change the perceptions of an entire community.

“African Americans look at the GOP as a party that simply doesn’t represent their community or interests,” Frazier says. “One man can’t change the perception of an entire party.”

James Lewis, Publisher of The Birmingham Times, Dies

E-mail Print PDF

BIRMINGHAM, Alabama – James Lewis, publisher of The Birmingham Times and the son of the black newspaper’s founder, has died.

Mr. Lewis, who colleagues said was 67 or 68, died on Sunday following an illness.

Mr. Lewis was the eldest son of Jesse Lewis Sr., who founded the Times in 1964 to give the black community a greater voice during the civil rights struggle.

“If the Lord had to come down and make a child, he could not make one any better than James,” Jesse Lewis Sr. said in a prepared statement. “The Birmingham Times made progress under his administration and will continue to do so.”

Mr. Lewis, who had worked in community development for the city of Birmingham, took over as publisher of the Times from his father in 1998. In both roles, friends said, he was a forceful advocate for the black community and Birmingham as a whole.

“He was always passionate about the paper, just like his father,” said Roy Williams, director of marketing at Holy Family Cristo Rey Catholic School. “It’s a great loss.”

Williams, a former Birmingham News reporter and a member of the Birmingham Association of Black Journalists, said Mr. Lewis’ influence reached beyond the limits of his newspaper.

“Our organization shares sorrow in the loss of Mr. Lewis,” Williams said.

Sherrel Stewart, a longtime Birmingham journalist and a founding member of the black journalists' association, said Mr. Lewis loved jazz, automobiles, seafood and the beach. He had a tremendous work ethic and believed that newspapers that focus on issues important to African American readers have a future despite the news industry’s troubles.

“He cared about Birmingham and the entire community, and he believed that communities are stronger because of the strong presence of the black press,” Stewart said.

Birmingham Times Editor Cheryl Eldridge will continue to handle day-to-day operations of the newspaper, Jesse Lewis Sr. said.

“Cheryl Eldridge, editor, has been the right-hand person of the Birmingham Times for 17 years and will continue to make the major decisions as it relates to the newspaper,” he said. “There is no reason that the Birmingham Times will skip a beat.”

Family Hour will be from 6:30 p.m. – 7:30 p.m. Wednesday at Davenport and Harris Funeral Home, 301 Martin Luther King, Jr. Drive, S.W., Birmingham.

Funeral services will be at noon Thursday at the First Congregational Church, Rev. Rodney Franklin, pastor, 1024 Center St., North, Birmingham.

The Black Unemployment Rate Drops for All the Wrong Reasons

E-mail Print PDF

By Freddie Allen
NNPA Washington Correspondent

WASHINGTON (NNPA) – There wasn’t much good news for any of the worker groups in the March jobs report, released last Friday. Even though, the unemployment rate fell to 7.6 percent, most economists agree that the drop is attributable to nearly half a million workers exiting the labor force.

“The unemployment numbers look good on the surface, but the real reason is that people left the labor force,” said Steven Pitts, labor economist at the University of California at Berkeley.

The Black unemployment rate decreased from 13.8 percent in February to 13.3 percent in March. The White unemployment rate also declined from 6.8 percent to 6.7 percent over the same period.

The unemployment rate for Black men declined from 12.9 percent in February to 12.7 percent in March. The jobless rate for White men dipped from 6.3 percent to 6.1 percent over the same period.

The jobless rate for Black women over 20 years old slid from 12.5 percent in February to 12.3 percent in March. The unemployment rate for White women over 20 years old climbed slightly from 6 percent in February to 6.1 percent in March.

The employment participation rate, a measure of those either employed or looking for work, fell for all worker groups over 20 years old except for White women, which was the same in February.

In a post for the Economic Policy Institute website, Heidi Shierholz, an economist for the think tank, wrote that the decline in the employment participation rate, also called the labor force participation rate, has nothing to do with retiring baby boomers.

“The labor force participation rate of the ‘prime-age’ population, people age 25–54, is also at its lowest point of the downturn, 81.1 percent. It’s the lack of job opportunities—the lack of demand for workers—that is keeping these workers from working or seeking work, not other factors,” wrote Shierholz.

According to the Labor Department, 496,000 workers left the labor force joining more than 800,000 discouraged workers who have already given up hope of finding work.

Federal government shed 14,000 jobs in March, continuing to drag down anemic job gains, raising early concerns about the effects of the sequester, the automatic budget cuts that went into affect last month.

“This could be the tip of the iceberg in terms of the larger impact of the sequester,” said Pitts.

In her post on EPI’s website Shierholz wrote that, since the recovery began in June 2009, the public sector has lost 720,000 jobs with nearly half of that (352,000) in local, public education.

In a statement released last Friday Congressional Black Caucus Chair Marcia L. Fudge said:

“While the private sector has steadily added jobs for 37 months, the public sector, where many African Americans are employed, continued to lose them. Last month 385,000 more requests for unemployment benefits were made and by year’s end, sequestration threatens to put an additional 750,000 people with full time jobs out of work. If Congress cannot come to an agreement on the best way to address this country’s fiscal health, these statistics show our economic future remains in jeopardy.”

New Loan Policies Fail Black Students in College

E-mail Print PDF

By Freddie Allen
NNPA Washington Correspondent

FIRST OF TWO STORIES
[Editor’s Note: This is the first of two stories by NNPA Washington Correspondents Freddie Allen and Maya Rodan examining how federal loan problems are failing Black students in college.]

WASHINGTON (NNPA) – Like thousands of Black college students, Bethanie Fisher, a psychology major at Howard University depended heavily on the Parent Loan for Undergraduate Students program that allows parents to borrow the full amount of college tuition and fees. During, the 2007-2008 school year, an estimated 33 percent of undergraduate students that earned degrees at Historically Black Colleges and Universities received Parent PLUS loans, double the rate of all undergraduate students nationwide.

In August of 2008, Fisher’s freshman year at Howard University, her uncle agreed to help her pay tuition. When he died suddenly of lung cancer at the end of her sophomore year, everything fell apart.

No one else in Fisher’s family met the standards for the Parent PLUS loans and now with stricter rules, her dreams of earning a degree from Howard University or any university are quickly evaporating. After scraping together enough money for a third year at the Washington, D.C. school Fisher, a Detroit, native ran out of time and money.

Now she must come up with almost $15,000 to pay the balance that she owes, before she can take another class at Howard University. Money that neither her mom nor her barely there father could afford. Fisher estimates that tuition plus room and board and living expenses, she spent more than $20,000 a year to attend Howard University.

“On paper is says that my mom makes a lot of money,” Fisher said. “But who has that much money to spare every single year in a single parent home?”

Fisher is not alone. Thousands of Black college students cobble together scholarships, loans and grants to earn college degrees. As President Obama champions education as the key to America’s future on the world stage, critical changes to federal financial aid programs threaten to close the curtain on the academic careers of thousands of Black college students.

In 2011, the Education Department made changes to a number of loan federal student loan programs in an effort to curb the number of loan defaults that were piling up when parents couldn’t pay. When the federal government largely cut out the banks in the student loan process, they also changed the rules for students and parents.

And it is those sudden rules changes that are creating havoc.

Now parents seeking the loans can be disqualified for past defaults, bankruptcies, or tax liens within five years of applying for the loan. Parents need a near spotless credit history now, a dream in itself in today’s tough economy.

“If you make it harder to get a student loan if you have families that are less able to pay for a college education less able to survive what you’re doing is cutting off the future and you’re also putting a particular burden on historically Black colleges and universities.,” said Mary Frances Berry, professor of American Social Thought and history at the University of Pennsylvania and former Assistant Secretary of Education. “Whoever decided to make these policy changes they need to sit down and think about how the goals that they have for higher education are absolutely irreconcilable with what they’re doing with the budget.”

And these changes could not have come at a worse time for HBCUs.

Black colleges also struggle to reconcile dwindling enrollments with their efforts to enrich the lives of their students. Some have been forced to reduced programs and cut staff sizes.

“What we have here is a situation where we’re getting sliced at the federal level and we’re getting diced at the state level,” said Lezli Baskerville, president of the National Association for Equal Opportunity in Higher Education (NAFEO), a member organization representing HBCUs. “Given the federal cuts and the disproportionate loss of wealth, the bursting of the housing bubble which disproportionately impacted African Americans, it signals a calamitous situation.”

In September 2012 a group led by William R. Harvey, president of Hampton University and chairman of the president’s Board of Advisors on HBCUs, sent a letter to Education Secretary Arne Duncan detailing the disparate impacts the loan changes have had on HBCUs.

“At Benedict College last year, 926 students (30 percent of those who applied) were deemed eligible and received Parent PLUS or FEFL loans totaling $13,567,321. This year, only 237 students (only 9 percent of those who applied) were deemed eligible and received such loans, totaling $3,754,938,” Harvey wrote.

The group also challenged the Department of Education’s use of extenuating circumstances in determining a student’s eligibility for a PLUS loan.

“There are no more extenuating circumstances than the grossly disproportionately high unemployment rate in the communities from which our students come and DoED’s failure to phase in or give notice of the new interpretation and implementation of the regulation regarding evaluating credit history. These actions are actively working against President Obama’s goal of having the highest proportion of college graduates in the world by 2020, and the Administration’s commitment and our nation’s dire need to increase the number of African American college graduates,” stated the letter.

The Atlanta Journal Constitution reported last October that “Morehouse College says it will furlough faculty and staff and make other budget cuts because of a drop in enrollment.”

Because of the Department of Education’s new loan policies, loan rejections jumped from 25 percent to 65 percent at Clark Atlanta University in Atlanta. CAU President Carlton Brown issued a statement saying a 13 percent drop in enrollment forced the school to cut travel and slow the hiring process for new faculty and staff.

Recent changes in the Parent Loan for Undergraduate Students left many students in bad straits like Fisher. The new rules shut out kids that had previously been admitted during the spring semester.

According to Cynthia Warrick interim president of South Carolina State University in Orangeburg, more than 1,000 students were denied Parent PLUS loans this academic year, leading to the lowest enrollment numbers in five years at the small school. On a campus of less than 5,000 students, losing that amount affected all aspects of campus life.

“This semester we cut cost cut spending and had to layoff employees. We had to tighten our belts,” said Warrick.

In October 2012, the school clipped $8 million from their budget.

“We’re still struggling with the numbers,” said Warrick.

South Carolina State quickly depleted their need-based grants and were forced to turn students away, some with “B” averages, but not good enough to earn scholarships.

“The loan programs are the only way these kids can get to college,” said Warrick. “It’s almost as if they’re telling the kids, ‘We don’t want you to go to college.’”

Johnny Taylor, president and CEO of the Thurgood Marshall College Fund said that the Department of Education should consider a grandfather-clause for students who have relied on PLUS loans in the past and were just recently denied due to the changes.

“It makes no sense to let these students leave school without a degree or without a way to pay back the loan,” said Taylor. “If you already invested two years into a student it’s silly to cut him off now. If the kid goes home without a degree, he’s going to default.”

Taylor said that his group is working with the Department of Education to seek a resolution that will save the academic careers of nearly 14,000 students that were affected by the PLUS loan changes this year alone. They’re also working with Congressional Black Caucus and some Republicans on Capitol Hill, just in case their efforts at the executive branch-level stall.

Taylor said that if it takes a lawsuit to resolve this issue, his group is fully prepared to take that next step.

“I remember Thurgood Marshall challenging ‘separate, but equal,’” said Taylor referring to the landmark 1954 Supreme Court decision in Brown vs. Board of Education that reshaped the future of education in the United States. “If he hadn’t been willing to challenge ‘separate, but equal” we would still have it.”

After sitting out for a semester and a last-ditch effort to get back into school for the spring 2013 semester, Fisher decided to move back home in February, ending her academic career at Howard University prematurely.

“To hear your friends complain about going to class when you’re just dying to sit in someone’s class, I just can’t do that anymore,” said Fisher.

The Detroit-native said that she needs to pay the $15,000 balance before Howard University will release her academic transcripts so that she can attempt to transfer credits to a school closer to home.

“It hurts more than anyone will ever know,” said Fisher. “If they weren’t going to let me finish, they shouldn’t have let me start.”

Page 8 of 234

Quantcast

BVN News Wire

blackvoicenews: Police Training in Urban Neighborhoods: Who Benefits? http://t.co/0N4arEpJ10 via @blackvoicenews

blackvoicenews: Obama's Troubles Aren't Comparable to 'Watergate' http://t.co/v9lXtvFW67 via @blackvoicenews